Wholesale Prices Pumping Gas Back Up Again

Motorists who have been doing double-takes at recent gasoline prices: look again. Those 99-cent prices are on the way up again.

A trend that in recent months brought the lowest pump prices in years appears to be running dry as area service stations yesterday began posting increases of several cents per gallon.

"Two weeks ago you could ride around and see 99-cent prices, but this week you don't see that anymore," said Earl Lynn of Lynn Oil Co., Allentown, a supplier to area service stations who surveys pump prices on a weekly basis. "We had a pretty good market there for awhile but it looks like that is over."

Lynn said he's seen his costs from wholesalers increasing over the past two weeks. He said he'd be passing on an additional 1-cent increase today.

Said Pat Murphy, owner of Pat's Arco in Bethlehem, where self-serve leaded regular was going for 98 cents early this month, "It was down a penny, down a penny - now prices are going up the same way."

Area petroleum price watchers, however, said they expect neither dramatic pump price increases nor major price drops. Dealers said the increases are probably the first signs of a gradual stabilizing of prices.

Pump prices from October through early February were the lowest since 1980, according to spot surveys of area service stations by The Morning Call and the Lehigh Valley Motor Club.

Said motor club road service manager John Heeney, "We kind of got conditioned that prices were going to keep going up. Then all of a sudden we began seeing these big drops."

A survey in early February of 10 full-service stations the club uses to track area gasoline prices showed a price range on regular leaded from $1.01 to $1.25. Two of the 10 stations reported self-serve prices of 98.9 cents and 108.9 cents. Yesterday the majority of the same stations reported increases.

"It looks like they'll start climbing up again," said Manny Sossiadis, owner of Manny's Arco in Bethlehem where a gallon of regular gasoline could be purchased for about $1 but began edging up this week.

A dealer at Gabe's Gulf in Allentown said he plans to take the increases "on the chin" as long as possible. Leaded regular was selling yesterday for $1.11 per gallon, down from $1.13 in early February.

Area gasoline distributors, who buy from New York and Philadelphia markets and supply to the area's service stations, said competition on the world oil market helped bring down wholesale prices and, in turn, pump prices charged to the consumer. Oil producing countries outside the Organization of Petroleum Exporting Countries began decreasing the price of their crude oil last year, which eventually triggered OPEC's price drop to the current level of around $28 a barrel. It was $34 in 1983. An overall oil glut contributed to the price decline.

"Throughout all of the 1980s, we couldn't find any prices under a dollar," said Cynthia McClain with the Governor's Energy Council, which tracks gasoline prices in Pennsylvania. "But lately we've seen some of the lowest prices in years."

Following the Arab oil embargo of 1973-74, prices rose sharply, reaching their highest point in 1981, when regular gas sold for $1.33 a gallon, according to a survey of 6,000 service stations by the American Automobile Association. The price of regular dipped to $1.27 in 1982, $1.22 in 1983, and $1.20 in 1984.

In an indication of how far prices came down before the recent increases, one national survey found some stations selling regular for just over 90 cents per gallon.

As sobering as the price increases may seem, however, most price watchers seem to think consumer gasoline prices will now remain stable.

Said McClain, "Our staff doesn't like to get into much forecasting, but we think these prices will hold out over the summer."

James Van Allen, an oil industry analyst with the Janney Montgomery Scott brokerage firm, said he believes the OPEC price drops have been milked for all they can, which will result in more stable prices all around.

"Right now there is a lot of confusion in the market and you're probably looking at some short term increases," said Richard Sisson, in charge of wholesale gasoline sales for the Atlantic Oil & Heating Co. in Macungie, one of the largest area gasoline distributors, supplying 135 to 150 service stations in Lehigh, Northampton, Carbon, Monroe, Berks and Warren counties. Sisson said any additional increases this Spring will be seasonal, due to the higher demand in warmer weather when more driving is done.

"You have a glut of crude oil and, because of people continuing to conserve more and drive smaller cars, the trend is still going to be for prices to go down," said Sisson, "but I don't see that they are going to get a great deal cheaper.

"There's not going to be any big increases nor alarm for shortages. There seems to be a stabilizing on the whole industry."